Federal Reserve Chairman Ben S. Bernanke's pledge to stop the credit-market rout from wrecking the economy failed to quell concern at the Fed's Wyoming summer retreat that the U.S. is heading for recession.
``I came to Jackson Hole thinking there would be no recession, but I'm leaving thinking we could well have one,'' said Susan Wachter, a professor at the University of Pennsylvania's Wharton School, who co-wrote the first academic paper presented at the conference.
``There are no optimists in the crowd here,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York and a former head of domestic research at the New York Fed. ``There's a pretty strong consensus that this has gotten a lot more serious.''
My guess is Ben is getting an earful about what he should have done rather than what he has done. As to whether or not he will listen is a different story. In addition, there is no guarantee all of the negativity is correct. Remember, the market has been tainted by 18 years of "easy Al, and his liquidity flooding band". In other words, people are use to rate cuts whenever there is a problem in the market.
3 comments:
Hello Bonddad - on dailykos you posted an excellent entry with a .pdf Economist file on it. It was a good summary of the file as well. Now I cannot find it...maybe a slow weekend. Can you post it again or post it here? Thanks. I want to refer others to it.
And, on the other hand, monetary policy can only rarely prevent a slide into recession, while US fiscal policy is focused on spending on an overseas war ... minimizing the boost to GDP and maximizing the negative impact on the current account deficit.
The problem here is that I don't ee how Bernake can do anything that's more than a psychological boost. There's plenty of cash in the market to be buying things. The problem is that nobody trusts what their money could buy at the moment.
What we are seeing is what you get from having a long period of ineffective regulation of the market. Had the government been stepping in and requiring full disclosure about what the hedge funds were investing in and some reasonable valuation scheme, there wouldn't be a problem.
Instead it's a game of hot potato but there are many potatoes in play, and nobody's really sure which ones are hot and which ones aren't. Thus we have fear, and thus we have a bad market. There's noting Bernake can do to change that fundamental equation.
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